Morgan Stanley has upped its price target for Cardinal Health (CAH, Financial) from $142 to $166, maintaining an Overweight rating on the stock. According to the firm’s analyst, stable utilization rates have bolstered growth in the Core Pharma segment, providing Cardinal Health with potential for additional re-rating. The analyst believes this period represents a significant opportunity for drug distribution companies, dubbing it the “Golden Era.”
Wall Street Analysts Forecast
Based on the one-year price targets offered by 14 analysts, the average target price for Cardinal Health Inc (CAH, Financial) is $155.51 with a high estimate of $173.00 and a low estimate of $119.12. The average target implies an
upside of 4.00%
from the current price of $149.53. More detailed estimate data can be found on the Cardinal Health Inc (CAH) Forecast page.
Based on the consensus recommendation from 18 brokerage firms, Cardinal Health Inc’s (CAH, Financial) average brokerage recommendation is currently 2.0, indicating “Outperform” status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Cardinal Health Inc (CAH, Financial) in one year is $118.71, suggesting a
downside
of 20.61% from the current price of $149.53. GF Value is GuruFocus’ estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business’ performance. More detailed data can be found on the Cardinal Health Inc (CAH) Summary page.
CAH Key Business Developments
Release Date: May 01, 2025
- Operating Earnings Growth: Increased by 21% year-over-year.
- Earnings Per Share (EPS): $2.35 for the quarter, a growth of 13%.
- Revenue: Nearly $55 billion, flat on a reported basis; adjusted for contract expiration, revenue increased 19% year-over-year.
- Gross Profit: Increased by 10% year-over-year.
- SG&A Expenses: Increased by 4%, with a slight decrease when normalizing for acquisitions.
- Pharmaceutical Segment Profit: $662 million, a growth of 14%.
- GMPD Segment Revenue: Increased by 2% to $3.2 billion.
- GMPD Segment Profit: Increased to $39 million.
- Other Segment Revenue: Increased by 13% to $1.3 billion.
- Other Segment Profit Growth: Increased by 22% to $134 million.
- Cash Position: $3.3 billion at the end of the quarter.
- Adjusted Free Cash Flow: $1.2 billion year-to-date.
- Share Repurchases: $750 million in shares repurchased year-to-date.
- Full Year EPS Guidance: Raised to a range of $8.05 to $8.15.
- Adjusted Free Cash Flow Guidance: Expected at the high end of approximately $1.5 billion.
- Interest and Other Expenses: Increased by $38 million to $65 million in the quarter.
- Effective Tax Rate: 22.4% for the quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cardinal Health Inc (CAH, Financial) reported strong third-quarter results with a 21% increase in operating earnings and a 13% rise in EPS.
- The company raised its fiscal ’25 EPS guidance to a range of $8.05 to $8.15, reflecting confidence in sustainable long-term growth.
- Significant growth was observed in the Pharmaceutical and Specialty Solutions segment, driven by strong utilization trends and execution.
- The acquisition of GI Alliance and Integrated Oncology Network is performing well, contributing positively to the company’s results.
- Cardinal Health Inc (CAH) completed the acquisition of Advanced Diabetes Supply Group, which is expected to be accretive to EPS immediately.
Negative Points
- The company faces potential tariff impacts, with an estimated $200 million to $300 million in gross tariff costs anticipated in fiscal ’26.
- Despite mitigation efforts, the GMPD segment continues to face challenges, with guidance narrowed to the lower end of the prior range.
- Interest and other expenses increased by $38 million due to acquisition-related financing costs.
- The effective tax rate increased by 2.5 percentage points from the prior year, impacting net results.
- The company is navigating a complex macro environment, which could pose risks to future performance.
Source: gurufocus.com
